Student Loan Debt – A Crushing Burden

Student loans are how most American students finance their education. They seldom have any other choice. This article I am quoting comes from Edufactory. It is interesting web site. It looks at the world from the vantage point of a college student, more European than American. But I like to hear what Europeans have to say about U.S. issues. I find the common thought pattern of the “beltway boys” or the “very serious people” to be irritating. This is a very large article. This is the opening paragraphs.

Debt has had a crushing impact on the lives of those who must take student loans to finance their university education in the US. For tuition fees that have been so notoriously high in private universities now are rising in public universities so quickly they are far out-pacing inflation. Student loan debt in the US has been much higher than in Europe (with the exception of Sweden), though recent developments there would indicate that this gap may soon no longer exist (Usher).

We should also take into account the fraudulent way in which the loans have been administered by the banks and the vindictiveness with which those who have been unable to pay back have been pursued by collection agents. The most frustrating aspect of student loan debt being the legally toothless position the debtor is in, because government policy has relentlessly vested all the bargaining power in the hands of the creditors.

Student loans are a strange philosophical creature here at the beginning of the 21st century. Daily, the newspapers and television are filled with talk about the need for highly educated workers. States with low ratios of college graduates to the general population are considered poor sites for new factories and development. A nation’s competitiveness, perhaps in the long term, its very existence, may depend on the level of education of its population.

So, how does discouraging people from going to college make sense? Isn’t that a form of slow societal suicide?

And what is the effect on those who bear that debt for decades? It’s pretty obvious it forces students away from any job that isn’t well paid. That debt makes sure that the debtor works all the time, year after year. It never stops. There is no opportunity to write that novel, travel or simply live a life free from constant financial pressure.

Why do we finance education this way? The philosophy of secure investment and low interest rates, a product of the Chicago School of Economics, epitomized by the policies of the International Monetary Fund are the root cause. To make investments maximally secure, government spending must be minimized and wage pressure limited. Spending must be limited because taxation, any taxation, for any purpose is inimical to maximum profit. Wage pressure produces inflation which reduces the value of debt. If debt decreases in value, once again, investment security is threatened. Therefore expenditures on education must be carefully limited.

Of course, from a banking stand point, subjecting millions of Americans to continuous debt during the entire course of their lives with the full support of the federal and state government to collect the money might seem advantageous.

Many of you have already realized the problem with this. In the long term, investments in a nation with a gradually decreasing educational level endangers investment. That is easily explained. You are only damaged by a poor long term investment, if once you have maximized profit you can’t move your investment elsewhere. When the United States becomes unprofitable, the money will simply move. By then the process can go on in, perhaps, Russia or some country in Western Europe.

Americans to preserve their country’s international standing, future prosperity and in the long term the existence of the nation might want to consider how to maximize the graduation rate as well as prioritizing the fields where we want graduates. Training tens of thousands of students each year in broadcast journalism when there are only a few openings does no one any good except those holding the educational loans.

Let’s read a bit more from the article –

As typical of “invisible” movements, statistics fail us in drawing its proportions. We have no estimate, for instance, of how many have been driven to suicide or how many have been forced to go into exile due to their student debts. Nor do we have a measure of the social impact of the growing de-legitimation of the student debt machine. We can only speculate about the consequences of disclosures concerning the collusion between the university administrations (especially in the case of “for profit” institutions) and the banks, now commonly acknowledged in the media as well as in congressional investigations. For sure, blogs and web-groups are forming to share experiences and voice anger about student loan companies like the biggest one, the Student Loan Marketing Association (nicknamed “Sallie Mae”). On Google alone, there are about 9,000 entries under the rubric “Sallie Mae Sucks,” and another 9,000 under “Fuck Sallie Mae.” Browsing through the chat rooms, with their harrowing stories of wrecked lives and mounting frustration against the operations of Sallie Mae, makes it clear that the potential for a debt abolition movement is high. So far, however, most attempts that have been made to give an organizational form to this anger have largely demanded the application of consumer protection norms to the management of the debt.

Student loans may well be justified as part of the mix that pays for education. But it should be determined at what level it deters significant numbers from college. It should be determined when it goes to institutions primarily set up to collect that money with little benefit from the education paid for. The proportion of the educational expense paid for these loans increases year by year. Is that healthy for the educational system in the long term or for the citizens in this country?

It takes intelligence to make good decisions about what we as a nation need from education. It takes intelligence to measure the effects of this debt on the society as a whole. It takes intelligence to challenge the strange doctrines of the Chicago School and its many adherents.